The Coldest Winds Bear Opportunity

It has been a cool spring in Chicago in more ways than one. Though the Midwest economy so far has escaped the more severe slowdown in other regions, chilly little gusts are rolling over the city.

They bring a sobering message, but one that should be viewed with thoughts of opportunity and not despair. The Chicago economy long has been noted for its resilience and flexibility, distinct advantages in this exciting new economic era. It may need these qualities in the next few years.

The tightening squeeze on credit, a consequence of the collapse of the junk bond market and the savings and loan crisis as well as Federal Reserve Board policies, is beginning to be felt here. If public announcements are to be believed, the city`s real estate boom continues apace, but vacancy rates are beginning to creep up.

Some developers are reported to be straining to find financing for their projects, and many are scouring the world for money. Deep-pocket lenders grow scarcer by the day, which was the basic reason Philip Miller, who re-energized Marshall Field & Co., failed to outbid Minnesota`s Dayton Hudson Corp.

The loss of roughly 1,700 Field`s jobs, which will be absorbed at Dayton Hudson headquarters in Minneapolis, is a rational act of efficiency by Dayton Hudson. Why duplicate jobs in an age that demands efficiency? But the loss of these particular workers will have an impact on other profitable aspects of retailing, particularly Chicago`s role as a wholesale retailing center.

Real estate also is a major factor in declining bank earnings in the region and has contributed to the caution that many borrowers now encounter when they contact their banker. It is a reminder that Chicago is not isolated from the rest of the country. First National Bank of Chicago, for example, suffered because of real estate loans in other parts of the country.

But Chicago has yet to see the kind of declines in real estate values that have struck the East Coast, the Southwest and even the West Coast. One reason is that the market here never got so far out of whack. The

rationalization of the manufacturing sector in the early 1980s held back income growth relative to other regions, and we never had a real estate bubble of the same magnitude.

No matter how hard we try, though, linkages with other regions cannot be avoided. Sooner or later, the deep recession in New York`s financial district is bound to be felt in the city`s freewheeling futures markets, especially in the area of stock-related instruments. As a presidential commission said after the 1987 stock market crash, there is one financial market in the U.S., all related. Wall Street and LaSalle Street have much in common.

The real question is how much the slowdown virus will infect our region. The answer is complex, because all the business, financial and economic linkages aren`t apparent. But it will infect us only to the extent that we are vulnerable and without vision, imagination or resilience, and even a bit of courage.

For example, UAL Corp., parent of United Airlines, had a terrible first quarter. Not only did it lose $36.4 million, but it struggled through a buyout soap opera and a sharp challenge by American Airlines for new routes. Some have even suggested that if American puts too much distance between itself and United, American`s main hub of Dallas-Ft. Worth ultimately will replace O`Hare International Airport as the world`s busiest airport.

But what did United do? While it had lost ground during the debilitating period of the buyout, it decided to press ahead with trying to expand its Asian and European routes and declared that, within two months, it may announce the largest order of wide-body jets in aviation history-perhaps for as much as $15 billion.

United may not have a choice, if it wants to continue competing in the next century, but it might well have hunkered down the way some firms do in times of trouble and cut, cut, cut.

The one thing Chicago has over other regions is its sense of economic independence and diversity. The Southwest is dependent on oil and defense, while defense has driven significant parts of the California and New England economies. The income from investment banking has long been a centerpiece of New York`s economy.

After the collapse of manufacturing in the 1980-81 recession, this region discovered the merit of diversification and, after several years of distress, built a broader economic base. This occurred without much help from Washington and because of the area`s creative energies. This is one reason Chicago is known as a truly American city-reliant on its own resources.

The growth of small business, in the city and the suburbs, is a sign of this. So is the optimistic effort to expand on Chicago`s central role as a convention center, a role that helps feed the city`s growing number of hotels. The way for Chicago to build its economy evenly and safely is to understand such linkages.